Correlation Between Goldman Sachs and Idemitsu Kosan

Can any of the company-specific risk be diversified away by investing in both Goldman Sachs and Idemitsu Kosan at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Goldman Sachs and Idemitsu Kosan into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Goldman Sachs Group and Idemitsu Kosan CoLtd, you can compare the effects of market volatilities on Goldman Sachs and Idemitsu Kosan and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Goldman Sachs with a short position of Idemitsu Kosan. Check out your portfolio center. Please also check ongoing floating volatility patterns of Goldman Sachs and Idemitsu Kosan.

Diversification Opportunities for Goldman Sachs and Idemitsu Kosan

-0.54

Correlation Coefficient

Goldman Sachs  Idemitsu Kosan

Excellent diversification

The 3 months correlation between Goldman and Idemitsu is -0.54. Overlapping area represents the amount of risk that can be diversified away by holding Goldman Sachs Group and Idemitsu Kosan CoLtd in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Idemitsu Kosan CoLtd and Goldman Sachs is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Goldman Sachs Group are associated (or correlated) with Idemitsu Kosan. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Idemitsu Kosan CoLtd has no effect on the direction of Goldman Sachs i.e., Goldman Sachs and Idemitsu Kosan go up and down completely randomly.

Pair Corralation between Goldman Sachs and Idemitsu Kosan

Allowing for the 90-day total investment horizon Goldman Sachs Group is expected to under-perform the Idemitsu Kosan. In addition to that, Goldman Sachs is 43.09 times more volatile than Idemitsu Kosan CoLtd. It trades about -0.02 of its total potential returns per unit of risk. Idemitsu Kosan CoLtd is currently generating about 0.21 per unit of volatility. If you would invest  668.00  in Idemitsu Kosan CoLtd on October 11, 2024 and sell it today you would earn a total of  1.00  from holding Idemitsu Kosan CoLtd or generate 0.15% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	95.45%
Values	Daily Returns

Goldman Sachs Group  vs.  Idemitsu Kosan CoLtd

Goldman Sachs Group

Risk-Adjusted Performance

8 of 100

OK

Compared to the overall equity markets, risk-adjusted returns on investments in Goldman Sachs Group are ranked lower than 8 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively uncertain basic indicators, Goldman Sachs unveiled solid returns over the last few months and may actually be approaching a breakup point.

Idemitsu Kosan CoLtd

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Idemitsu Kosan CoLtd has generated negative risk-adjusted returns adding no value to investors with long positions. Despite nearly stable basic indicators, Idemitsu Kosan is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Goldman Sachs and Idemitsu Kosan

The main advantage of trading using opposite Goldman Sachs and Idemitsu Kosan positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Goldman Sachs position performs unexpectedly, Idemitsu Kosan can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Idemitsu Kosan will offset losses from the drop in Idemitsu Kosan's long position.

The idea behind Goldman Sachs Group and Idemitsu Kosan CoLtd pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Investing Opportunities module to build portfolios using our predefined set of ideas and optimize them against your investing preferences.